BC Partners’ Wautier spies potential vintage year; Aurelius Group reported to pull out of Clear Channel Europe deal

Financing markets could potentially get back to functionality by early 2023.

Morning Eurohubsters, Craig McGlashan here with the Dealflow.

We’re waiting on some thunderstorms to hit here in London to break the latest heatwave, and it seems that many in private equity are also playing a waiting game. Deal activity has slowed, but BC Partners’ Jean-Baptiste Wautier reckons one of the “best vintages” in years could be ahead – if we first get a major repricing.

Discipline. Europe is in the depths of a challenging dealmaking environment, for both buyers and sellers – but it could turn into a vintage to rival that of 2010 or 2002, according to Wautier, partner and chief investment officer, private equity, at BC Partners.

Macro uncertainty and a quasi-shutdown of debt markets in Europe is behind the difficult conditions, Wautier, who is also a member of the management committee, told me.

“We continue to be incredibly disciplined and to actively explore a healthy pipeline of opportunities because there will be a point at which the market reopens,” he said. “If there is a major repricing, then this is likely to be one of the best vintages you’ve seen on the PE side for many years, just like 2010 or 2002.”

That reopening could come as soon as next year, if financial market history repeats itself, said Wautier. “When we’ve had periods of quasi closures like this, for example post-Lehman, it’s usually for less than a year because the system cannot stop functioning for too long. Banks need revenues to exist, and to get revenue they need to lend money. Institutional investors need returns to meet their liabilities such as pension payments.

“Financing markets started closing in Q2, so we might cautiously expect them to reopen in Q1 next year – not necessarily a full return, but functioning.”

You can read the full interview here.

Pricing mismatch. Wautier also explained how uncertainty over pricing was complicating dealmaking. That dynamic seems to have scuppered a potential blockbuster deal.

Germany’s Aurelius Group has backed out of a bid for US digital billboard company Clear Channel’s European business, according to The Mail on Sunday. The report says that Clear Channel had put a price of around £1 billion ($1.2 billion; €1.2 billion) on the European business, but that Aurelius would only pay around half that figure.

Aurelius is headquartered in Grünwald.

Private equity in private. Our colleagues over on Buyouts have added another article to their great Off-duty­ series, where they interview top investors, including about what they like to do when not making deals.

The latest interview is with Vistria Group’s co-CEO Kip Kirkpatrick.

Here are a few of my picks from the interview.

What book are you reading right now?

The Splendid and the Vile: A Saga of Churchill, Family, and Defiance During the Blitz by Erik Larson.

What is your favorite song, album, performer or music genre?

I get teased about this relentlessly, but 1980s and 1990s rap. Flavor Flav and Public Enemy. I was raised on hip hop.

Which PE buzz words or jargon do you hate most?

“Pro forma, run-rate adjusted EBITDA.”

You can read the whole interview here.

That’s it from me – have a great week and we’ll speak again tomorrow.

Cheers,

Craig